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Builder confidence at highest point in nearly 10 years

According to the NAHB, more builders are feeling confident about the market, but because of where the readings are, this is not exactly the comeback it is being portrayed as by traditional media outlets.

home builder confidence

home builder confidence

Builder confidence jumps up in July

According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, builder confidence in the market for newly built, single-family homes rose six points to 35, representing the largest single-month gain recorded in nearly a decade, bringing the HMI to its highest point since March of 2007, prior to the housing crash.

While the NAHB points out the improved margins, any reading under 50 still indicates that more builders view sales conditions as poor than as good, so the growth is positive, but by no means indicates a housing comeback as some are portraying this single month’s reading.

“Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This is greater evidence that the housing market has turned the corner as more buyers perceive the benefits of purchasing a newly built home while interest rates and prices are so favorable.”

“Combined with the upward movement we’ve seen in other key housing indicators over the past six months, this report adds to the growing acknowledgement that housing – though still in a fragile stage of recovery – is returning to its more traditional role of leading the economy out of recession,” noted NAHB Chief Economist, Dr. David Crowe. “This is particularly encouraging at a time when other parts of the economy have begun to show softness, and is all the more reason that the challenges constraining housing’s recovery – namely overly tight lending conditions, poor appraisals and the flow of distressed properties onto the market – need to be resolved.”

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HMI performance drill down

According to the NAHB, all components recorded gains in July. Optimism regarding current sales conditions rose six points to 37, and optimism toward the traffic of prospective buyers rose six points to 29. The largest gain was seen in the component gauging sales expectations for the next six months, which rose 11 points to 44, the only indicator nearing a level reading.

Likewise, every region posted HMI gains in July. The NAHB reports that the Northeast registered an eight-point gain to 36, while the Midwest gained three points to 34, the South gained five points to 32 and the West gained 12 points to 44.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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